September 13, 2010,
C.L. asks from Dallas, TX on September 10, 2010
Questions About Working a Commission Only Job
I was wondering if anyone has any experience with working for a commission only job. I've always been paid either hourly or salary so this is new to me.
I recently began working for a small family owned restaurant. They are about to open their second location and are also trying to expand their catering division. Initially I was hired on to help book catered events and to help with some marketing, pr and restaurant development (therefore, I am able to work out of my house). My focus for catering was off-site catering (like for weddings, big events, etc). They also do corporate lunch catering, but I wasn’t going to be as involved with that. We agreed on a hourly rate for anything not related to booking catered events and I would get a commission for the catered events. I feel like there is some grey area.
The owners recently discussed with me that some of my hours I've been posting should be considered commission. For instance:
Cold calling companies to talk about catering services
Cold calling reception venue's to get on their preferred catering list
Networking to spread the word about the company.
To me, all of those tasks should be considered hourly, since I'm not actually booking an event, I'm just talking about the services we provide. The owners said these hours are considered commission, because they could ultimately lead to a catered event. They had mentioned to get rid of some of these gray areas by making me commission only. Meaning any catering ordered (weather it’s for corporate lunches or big events) that I would get a commission for them. Regardless if the corporate lunches went through me or not.
I’m not sure what to do. I don’t know how other catering professionals get paid. Is it common to only get commissions and what is the typical commission? I’m getting 10%. I feel like there’s days where I’m working for free, and I don’t know if it’s just because they are still new. Once the word gets out about them, the commissions could be great. I just don’t know if it’s worth not getting paid until that happens.
S.B. answers from Redding on September 10, 2010
Commission only positions are a very slippery slope.
You can work your butt off for hours at your own expense and until or unless there is an actual sale or event booked and paid for....you don't get anything.
I've been in the insurance industry for years and now almost all the jobs are commission only. No reimbursement for gas or expenses for travel. Many employers are going to "commission only" because it cuts down on their overhead for one, and, they think that it basically forces a person to be a go-getter and bring in business. The downside of that is that people can't afford money out of their own pockets to promote a business and drive all over the place with no income coming in.
There certainly can be lots of days when you literally are working for free. Or, going in the hole to do it.
I guess you have to ask yourself approximately how much catered events go for and what your 10% commission would be.
Use a round number...like $10,000. You know what 10% of that is. How many of those events will you have to book a month just to break even for your expenses, let alone get ahead at all? Can you afford to possibly go months without booking any events?
Are they paying for local advertising to get the word out or just relying on you to do that for them for free?
I could be wrong, but it sounds to me like they want work done, but don't want to pay anything until they have some clients signing on the bottom line and in a new business venture, that's asking a lot of someone.
I hope you get it worked out.
Best of luck to you.
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D.S. answers from Dallas on September 11, 2010
I have been in the same position for 7 years. I was straight commision until the company changed structure 4 1/2 years ago. I was not ever considered contract labor and always had my benefits and 401K. That being said, I preferred being straight commisions. I made much more money on my sales and I did not have as many requirements on my head. I didn't have to worry about attending all the sales meetings and I was able to pretty much take time off whenever I wanted.
I am salary + commisions now, but when I was straight commisions I was not compensated for cold calling, chamber events, or networking. It is all about you building a book of business.
I agree that you need to clarify the grey areas, but ultimately you make more money working commisions IF you can sell.
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S.H. answers from Honolulu on September 10, 2010
so... think about 'why' they are pushing the 'commission only' parameters on you, now.
It is usually for their benefit, as business owners.
Their bottom line.
For instance, it is not to make you 'rich.'
next, you need to see if this is something you'd want... or have a knack for, or enjoy. Commission only jobs... are of a different nature/stress/goals.
Would they then apply different 'goals' on you... meaning, that you have to, hit a certain sales/booked events each month... ???? ie: quotas on your performance/commissions?
What are the performance parameters, you would have to meet... per them... for a commission only job?
How is this going to affect your job/employment/qualifying for any medical coverage? Your hours.... per week/per month and if you have a certain in office job schedule???? What about on the field work? Meaning, would you have to go to businesses and propose your services and advertise etc. and obtain clients???
many things to consider... they have not told you, the new 'requirements' for this commission only job, and how it impacts your job status or maintaining of your medical coverage etc.
Would you be considered a "contract worker" or a regular on staff employee with set hours etc.?
It is too soon, to agree or disagree to this new job structure, because they have NOT explained the new job requirements to you. At all. AND they only NOW told you, that some of your your existing duties are considered "commission. So to me, it seems like THEY have on their own, decided, that some of your duties are "commission" and they did not stipulate this before, like when you were originally hired.
all the best,
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S.R. answers from McAllen on September 10, 2010
I have been working commission only for 7 years,for different products and industries Also now that we have our own business we pay commission only for sales, so I know both sides of the coin.
First of all, I don't ask my sellers to do anything besides that, to avoid this gray areas, also I make sure that they can make more money than if I paid them hourly, I like to keep my people happy, as opposed to focusing on cutting costs.
Because the potential for income is or should be higher, any and all efforts to make a sale or a booking are considered part of that sale effort and therefore those hours would be considered commission. I would consider them commission because that is also part of the sale effort. Its not that you are working for free is that your commission should cover those efforts when that sale or booked.
Since I work in a non-related industry, I don't know what the typical commission is. In my experience getting paid by commission has always been worth it.
Investigate the commission and if it fits your needs meaning if you can realistically make more money on commission, you should know by now, then stick with it. Otherwise I advice you find something hourly or salary.
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W.L. answers from Dallas on September 12, 2010
I have never worked catering but I have worked commission and they are correct what you have been billing should fall under commission. If you are not comfortable with that try to renegotiate for a specific income plus commission. Be prepared to find another job. You could also work on a draw where they agree to pay you a set amount and you have to bring in commissions to cover that amount, in months where your commissions exceed the draw yo get more but in months that you do not meet that goal the amount is taken out of the next month's pay.
A.F. answers from Dallas on September 11, 2010
Have you considered working for yourself? I work from home and make a difference for others with their health and finances and get reworded. I have time and financial freedom. You can work much less hours and make more money.
I will be happy to share what I do.
B.O. answers from Portland on September 10, 2010
I have done work like this before. It depends on what you agree to. I have worked where all I made was commission off the event, so it motivated me to spend my time wisely in choosing avenues to pursue. I have also worked where I was paid hourly for my legwork and made a much smaller commission on the event. It depends on the percentage of commission your agreement has if it is worthwhile or not. Plus you also have to factor the average cost of a typical event and the amount of events the restaurant is able to cater in any time period. Will the restaurant hire more catering staff to meet the growth? What is business/growth plan? Good luck!
A.S. answers from Denver on September 10, 2010
Working commission only is exactly that. You get paid when they get paid. Any effort you put into getting, closing and retaining a client is on you and you hope to heaven clients stick with you and order from you regularly.
All the items mentioned should be considered tasks associated with obtaining your commission and not "hourly".
So here's my description of sales v marketing. When it's sales, it's one to one relationships. With marketing it's one to many.
With sales, you work directly with a person, and try and persuade them to use your product: cold calling, bring them in to sample the food, network at Chamber events to get business cards, etc.
Marketing is getting the attention of as many people as possible. There is no singular relationship. It's advertising, mailers, waving signs on a sidewalk, putting together materials for salespeople to use, etc.
There-in should lie the way to distinguish if your advertising and marketing or working on catering, and hence paid hourly or at the close of an event. HTH.